Effect and efficiency of Mergers and Acquisitions on the financial performance of firms in the banking sector

Abstract

The proposed research aims at finding out whether mergers and acquisitions have a significant effect on the financial performance of firms in the banking sector. The results of the review of previous literature indicates that mergers and acquisitions may have both positive and negative effects on performance of organizations. The study will be anchored on two theories which include the user cost of capital theory and the agency theory. The dependent variable for the research will be financial performance of firms in the banking sector which will be measured by investigating the effect of mergers and acquisitions on profitability, return on investment, return on equity, and earnings per share. The study will utilize secondary data obtained from the financial statements of firms in the banking sector as well as information from stock exchange platforms. Regression analysis will be used to test the research hypotheses and determine the relationship between the independent variable and the dependent variables. The results will be presented using tables and figures.